Commission Communication: Review of the introduction of euro notes and coins.

Legal base:



Document originated:

6 March 2002

Deposited in Parliament:

25 March 2002

Department:

HM Treasury

Basis of consideration:

EM of 21 March 2002

Previous Committee Report:

None

To be discussed in Council:

Date not known

Committee's assessment:

Politically important

Committee's decision:

Cleared

Background

22.1 Euro notes and coins were introduced in the 12 participating Member States on 1 January 2002 . On 17 October 2001 we considered two reports on the preparations leading up to the introduction of the euro.

The document

22.2 The document reviews the physical introduction of the euro and summarises the findings of the January and February 2002 Eurobarometer surveys of how the change of currency was perceived by individuals and firms in the 12 Member States.

22.3 The report examines the introduction of notes and coins; related matters including price stability, production quality, security measures and conversion of coin-operated machines; the reactions of individuals to euro notes and coins; and the changeover preparations made by small and medium-sized Enterprises.

22.4 Overall, the Commission concludes that the transition to the euro went smoothly and that the changeover took place more rapidly than initially expected, with the majority of cash transitions being conducted in euros by the end of the first week and little national currency remaining in circulation after the second week. The main part of the Commission's summary is reproduced below:

"The introduction of euro notes and coins was the largest-ever currency-changeover operation. Europe showed that it was up to the task and was able to meet the difficult challenge of ensuring a smooth transition. The participating countries produced 15 billion notes and 51 billion coins and then distributed in the first few weeks of 2002 some 8 billion notes and 38 billion coins to 218,000 banks and post offices, 2.8 million sales outlets and 302 million individuals in twelve different countries. They also had to withdraw in a matter of weeks a large proportion of the 9 billion national notes and 107 billion national coins in circulation.

"This major success is due to the quality and extremely thorough nature of the preparations made by the participating Member States, the European institutions (the European Central Bank and the European Commission), the national central banks, financial institutions, sales outlets, the police and cash-transport firms and to the active and enthusiastic participation of the public, without which this operation and the rapid distribution of euros would not have been possible. The public in Europe have accepted their new currency rapidly and enthusiastically, purchasing the mini-kits of coins on a massive scale before 1 January and flocking early on to cash dispensers and banks to obtain euro notes. From the training of payout-desk staff to the special programmes for the vulnerable groups in society, preparations were systematic in all areas. The national finance ministers have played a key role in supporting and encouraging economic actors. The European Central Bank has effectively coordinated the measures taken by the national central banks. For its part, the Commission has been instrumental throughout in fostering and coordinating action taken by the participating countries by providing guidance on the preparations in the form of recommendations and proposals (in particular, the recommendation of 11 October 2000 and the communications of 3 April and 10 October 2001) and by organising the work of the networks comprising the heads of the national administration task forces and the communication directors in the finance ministries. For the entire period of the changeover, the Commission has also acted as a central information point operating via the European Quick Alert Network it set up.

"As preparation and back-up for this operation, communication campaigns of exceptional duration and scale have been conducted. The aggregate budget over the period 1996-2001 for the national information campaigns, which the Commission has helped finance, amounted to €321 million (or €1.05 per inhabitant). The Eurosystem has also undertaken an extensive campaign costing €80 million. If the preparations made by banks and trade associations are included, more than half a billion euros have been spent in total on informing individuals and economic actors.

"These huge efforts on the part of all the economic and institutional actors involved have paid off: the transition to the euro has gone smoothly. The change in currency has taken place more rapidly than initially expected (in 1999 the Council had set itself the objective of completing the bulk of the exercise within fifteen days) but in line with the forecasts made by the Commission in its communication of October 2001: euro payments accounted for most of the cash payments that had been made by the end of the first week in January; by the end of the second week, very little national currency remained in circulation."

22.5 As regards, the effect of the introduction of the euro on price stability, some 67% of the public felt that more often than not prices had been rounded upwards, with 28% responding that price increases and decreases balanced one another out and 1.9% that prices had more often than not been rounded downwards. The inflation figures published by Eurostat on 28 February confirmed that there had been no general increase in prices as a result of the currency changeover and estimated its impact on the monthly price trend at between 0% and 0.16%.

22.6 According to survey data, some 60% of people considered the changeover to the euro will have more advantages than disadvantages for them personally. The assessment made of the introduction of the euro notes and coins was extremely positive, with over 80 per cent of the public taking the view that it went well or very well.